(Business in Cameroon) - Commercial banks within the CEMAC zone abstained from participating in the bond issuance by the Bank of Central African States (BEAC) on April 8. This operation, which aimed to withdraw CFA50 billion from the banking system, was declared unsuccessful despite the central bank offering a 3.5% interest rate for 28-day maturity bonds.

This marks the second unsuccessful bond issue for BEAC following a similar occurrence in February 2024. The latest outcome indicates a liquidity crunch in the regional banking sector, amidst stricter monetary policies designed to reduce banks' lending capabilities to the CEMAC economies.

The trend in BEAC's bond sales indicates a consistent pattern: Following the failed attempt on April 8, later offerings also faltered, barely achieving demand coverage rates of 30% and often only drawing interest from a single investor. BEAC Governor, Yvon Sana Bangui, attributes this lack of interest not to a liquidity need within banks but to overly stringent eligibility criteria. He has not ruled out the possibility of adjusting these conditions to make BEAC-issued securities more appealing to commercial banks.

Following the increase in benchmark interest rates, suspension of liquidity injection operations, and ramping up of weekly liquidity withdrawal efforts, BEAC bonds have emerged as the central bank's latest strategy to drain bank reserves and restrict credit access. This approach is part of an effort to mitigate the monetary origin of inflation, which accounts for 20% of the overall inflation in the CEMAC zone.